Intangible assets valuation

Disclaimer: IPSIDE INNOVATION is not a law firm an cannot provide legal advice

Intellectual Property Rights (IPRs) appraisal

The appraisal of IPRs means determining a monetize value of a consistent set of IPRs.
Such a consistent set consists for instance in an industrial property rights portfolio such as patents, trademarks and designs, licenses, as well as other intangible assets connected with intellectual property such as softwares, trade secrets and know-how.
The set is consistent insofar as these rights cooperate to provide to their owner a competing advantage with respect to a product or to a service or a family of products or of services.

IPSIDE INNOVATION’s know-how

The specific know-how of IPSIDE INNOVATION in this matter is to determine the value of that set of IPR at an early stage of its exploitation and even before the starting of the effective exploitation of this set, provided that a persuasive business plan is available.
The appraisal method developped by IPSIDE INNOVATION is based on the financial methods used for project valuation, in particular, by using real options analysis. Starting from a basic scenario, corresponding to an already carried out development and/or to a project for a future development, this method makes it possible to assess a plurality of possible evolutions of this scenario as well as the probability of these evolutions, and to figure out a value range corresponding to the competing advantage provided by the aforementioned set of IPRs.
IPSIDE INNOVATION’s method can be used to appraise a not yet granted patent in the framework of a project concerning a market with the still dubious incomes. Of course, when increasing the number of risk factors with regard to the project, the value of the considered IPRs portfolio is reduced just as the range where the actual value is likely to be found is widened. However this value can be further appraised, later on, when the project is running and when uncertainties vanish.
IPSIDE INNOVATION’s method looks at the project from the investor’s / buyer’s point of view, and tries to answer the following question:

Taking into account the potential ROI and the risks, how much does an investor is ready to pay for acquiring the IPR portfolio?

And always keeping in mind that the investor might invest his money differently like:

Investing in other assets in the same field but with a lesser risk

Financing the development of an alternate technology or alternate method giving the same advantage or tackling the same targeted market.

IPSIDE INNOVATION’s method also considers several withdrawal options as compared to the base project (delaying the project, licensing the rights, abandoning the project ….) and assesses the value of these withdrawal options.

Why appraising my IPR portfolio ?

IPSIDE INNOVATION’s method is particularly suited for start up companies. Intangible assets often constitute the most of the value of a startup company, and among these intangible assets, IPRs are the most easily transferable because they can exist independently from their owner. Therefore, with respect to an investor, those rights are likely to provide the best security on his investment.

Thus, the appraisal of an IPRs portfolio is particularly useful in any operation such as fund raising, merger or company acquisition.

The value given through IPSIDE INNOVATION’s method is a concrete base of discussion for the parties.

The detailed analysis carried out also makes it possible to set a base of discussion about the nature of safeties that are the most suitable, about the conditions of the transfer, and opting-out scenarios.

The value of the IPR portfolio being estimated within the framework of a project, the delivered report contains valuable information and indicators to be inserted in the project dashboard that makes it possible to anticipate the evolution of this value according to the actual running conditions of the project.

In many cases, the IPRs portfolio appraisal process allows its owner to consider his portfolio in a more managerial approach.

How to start an IPR portfolio apparaisal

The appraisal of an IPR portfolio requires a close interaction with a specialits from IPSIDE INNOVATION There cannot be any valuable appraisal of an IPR portfolio without a clear understanding of the business model of the owner of the rights, and how that business model takes advantage of the exclusive rights obtained through the IPRs portfolio.

What it is necessary:

A project supported by a business plan extending over a appreciable period of time (usually 3 to 5 years). Said period may be spread out between the past and the future but must include the present.

IPRs that are relevant with the aforementioned project.

IPSIDE INNOVATION’s method cannot appraise an IPR which is not associated with a project likely to generate incomes, although said project may be purely theoretical.

Information that is desirable :

A record of all the expenditures used to create and obtain the IPRs (R&D expenses, attorney fees, marketing expenses…).

To identify its competitors: they can be direct competitors or proposing alternative solutions to the same needs or to the same problem.

Information about competitors, e.g. their growth, their market share, their margin.

Prepare to have all this information in hand and get in touch with IPSIDE INNOVATION